Question
In: Accounting
At December 31, 20X7, Big Corporation reports the following stockholders' equity on its balance sheet. Big...
At December 31, 20X7, Big Corporation reports the following stockholders' equity on its balance sheet. Big uses the cost method for treasury stock accounting. The company held no stock in treasury at this date.
|
Preferred Stock, 8%, $20 par, cumulative, non-participating |
$3,000,000 |
|
Common Stock, $5 par |
10,000,000 |
|
Paid-in Capital in Excess of Par-Preferred |
200,000 |
|
Paid-in Capital in Excess of Par-Common |
27,000,000 |
|
Retained Earnings |
4,500,000 |
During 20X8, the following transactions affected stockholders' equity:
Jan. 1 30,000 shares of preferred stock issued at $22 per share. Feb. 1 50,000 shares of common stock issued at $20 per share. Mar. 15 2-for-1 split on common stock
April 15 4,000 shares of common treasury stock purchased at $21 per share. June 10 1,500 shares of treasury stock reissued at $22 per share.
Dec. 30 The preferred dividend of $288,000 is paid, and a common dividend of SOC per share is
declared; to be paid on March 1, 20X9. Assume no dividends in arrears.
Determine the following amounts reported for Big Corporation at 12/31/20X8.
a) Number of Preferred Stock shares outstanding;
b) Number of Common Stock shares outstanding
Solutions
Expert Solution
| Preferred stock | Common stock | |
| Opening balance | $3,000,000/$20 = 150,000 | $10,000,000/$5 = 2,000,000 |
| Shares issued on Jan 1 | 30,000 | |
| Shares issued on Feb 1 | 50,000 | |
| Mar 15, stock split (2,000,000+50,000) | 2,050,000 | |
| Buyback of shares on April 15 | (4,000) | |
| Resale of treasury stock on June 10 | 1,500 | |
| Total number of shares outstanding | 180,000 | 4,097,500 |
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